We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Monday, 30 March 15
WORST IS OVER FOR THE DRY BULK MARKET, BUT THE PAIN WILL REMAIN FOR YEARS TO COME, SAYS BIMCO CHIEF ANALYST - HELLENIC SHIPPING
 The current demise of the dry bulk market isn’t one to go away anytime soon. That doesn’t mean that it can’t improve, with all ship classes expected to cover their operating costs by May. Meanwhile, demolition activity isn’t enough, at least thus far, to offset oversupply of tonnage in the dry bulk market. It’s one of the reasons behind the downfall of the market in the past few months.
In an exclusive interview with Hellenic Shipping News Worldwide, BIMCO’s Chief Shipping Analyst, Mr. Peter Sand, said that the organization expects a fleet growth of 19m DWT for 2015, while already 8m DWT of bulkers have been scrapped. However, the market fundamentals remain negative, despite increasing demand during the current quarter. As Mr. Sand puts it, “we need multiple years of demand outstripping supply to turn the tables. The fact that demand may be fading somewhat now with China in an economical transition phase is not making prospects any better”.
Traditionally, the second quarter of the year signals the rebound of the dry bulk market, at least in terms of demand, with the grain/soya trades of South America kicking in. What’s your estimates about the demand side of the equation in the market going forward?
BIMCO is comfortable that demand for dry bulk ships is improving in Q2 as compared to Q1. Primarily due to increased volumes of soya and iron ore getting seaborne out of South America. Most focus will be on Brazil, with Argentina in a supporting role as soya exporter. It is positive for shipping volumes that Argentina is on track for a record harvest with 5% gathered already and the combined soybean production for Argentina and Brazil, as estimated by USDA, is to hit an all-time high at 150 million tonnes.
Nevertheless, we have to remain patient as regards to increased iron ore exports out of Brazil. In our recently published dry bulk market report we stated that Australia “won the battle” of increased sales to the Chinese in 2014. Additionally, “BIMCO expects that they will not let go of the lead in 2015, at the expense of long-haul shipping demand from Brazil.” Insight provided by Commodore Research & Consultancy supports this view – unfortunately.
For the full year, BIMCO expects demand a bit lower than estimated at the end of 2014. We are currently looking at 3-4% growth down from 4-5%. Key importer, China, is the main culprit behind this revision.
With the market plunging to all-time lows during February, do you think that the worst is behind us? Would you say that this time around, the main reason behind the dry bulk market’s demise is low demand or tonnage oversupply, which was deemed as the main “culprit” in the past?
The pain will stick around for a number of years even though the worst is behind us. The second dry bulk recovery in recent years from the trough in 2012 lasted until the autumn of 2014 where it became apparent how fragile it was. Mostly brought down by overcapacity, but also a tendency that the demand side would not remain as strong as it had been for the past decade or two. Key trigger behind this is of course the decline in coal imports from China, the still lack of nickel ore and bauxite imports and the fact that most importers (excl. China) is still not back at levels reached in 2007-2008!
If you try to look back on the big fleet growth years of 2009-2012, it grew by an annual average of 13.1%. All of those years the overcapacity increased. In 2013-2014, the fleet grew by an annual average of 5.1%, which is much more balanced, but it does not change the fact that the overcapacity is still here. We need multiple years of demand outstripping supply to turn the tables. The fact that demand may be fading somewhat now with China in an economical transition phase is not making prospects any better.
Can India support the market in a few years’ time, much like China did since the early 2000’s?
India is becoming more and more important to the dry bulk market, but they are still not to be seen as “a new China”. The two nations are very different and their development paths not alike. Unleashing the potential of India will be done at slower pace providing a solid level of demand growth going forward.
Given the challenging conditions which have prevailed so far in the market, when do you expect to see rates back above operating expenses, if not for all, at least for the majority of vessels?
BIMCO forecast freight rates for all dry bulk ships to remain below USD 9,000 per day for March-May. The trend is seen up – meaning that they should all be above OPEX cost levels in May. That is if we assume OPEX between USD 4,500 per day for the Handies going up to USD 7,500 for the Capes.
Looking at OPEX alone means Handies, which is making USD 5,766 per day in the current market, and Supras, which is making USD 6,772 per day, is getting OPEX covered. Panamaxes and Capesizes are not.
Beyond OPEX, you need to look at capital costs too. Interests, repayments, and/or depreciations on the fleet often means more to profitability than OPEX does. So in order to be “back into the black” all costs must be covered – freight rates must reach OPEX times two or three, as a rule of thumb, to earn money for supporting a going concern.
How important has the fall in bunker prices been for shipping companies, given the reduction of their operating costs? Would we have seen more bankruptcies in the segment, according to your view?
Cutting the bunker costs in halves is definitely a sizeable cost reduction on the voyage related expenditures. A cost reduction for the one paying for the fuel, that is. So who does that?
Mostly the spot operators working on a USD per tonnes basis, paying the fuel themselves, reap the benefits. So reaping the benefits of a falling cost item is a matter of negation skills too. In case your ship is out on charter, the charterer gets the cost reduction, as the owner is not paying voyage related expenditures. OPEX is only impacted to a minor extent as the price for lubricants may follow the oil price down somewhat.
Will the Capesize segment lead the way “out of the mud” once more?
Without doubt. Why? Because the demand picture as we see at BIMCO is very much biased towards the larger ship sizes of Panamax and Capesizes, whereas the demand situation for the two smaller segments is more slow growing. Bear in mind though that the current drop in rates was also lead by Capes, indicating a “normalized” market condition, but as Capes also took the deepest dive it becomes clear that overcapacity is still significant also for Capesize segment.
In this market environment, which options have ship owners to cut their losses? Out of demolition, slow steaming, or lay ups, which is the preferable choice at the moment?
All options are open, but the only significant one and most widely applied is slow steaming. Fortunately also the most effective one to counterbalance oversupply. Downside however is that is has a temporary nature as compared to demolition of a ship, which has a permanent effect on fleet growth, nominal and actual.
Demolition is also being used as a tool to turn around fortunes. The poor condition of the markets means BIMCO is forecasting total volume of dry bulk ship capacity to go higher than in 2014. Our estimate is 19m DWT for 2015 with some 8m DWT scrapped already.
In terms of investments, have asset prices adjusted accordingly either in the S&P or the newbuilding markets? Is it a good time to invest in modern tonnage, price-wise?
Newbuilding prices have not hit the floor yet; they are still by some distance higher than in 2012. Second hand prices have tumbled the most with all but Capesizes now below the 2012-lows. Capes being on par. Second hand prices has gone down by 40% over the past year, with older ships taking the biggest hits. Is now a time to invest, price-wise? Well, the return on investment seems to be potentially higher elsewhere. Despite many reasons to pick a newbuilt instead of a second hand – the eventual arrival of a more balanced market would all other things being equal be postponed by adding more tonnage to the market without removing the equivalent capacity. Should you be in need of extra tonnage, the market would be better off if those ships are found in the second hand market.
Source: Nikos Roussanoglou, Hellenic Shipping News
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 02 April 15
NEWBUILDING ORDERS FOR DRY BULK CARRIERS "DRY" UP
Newbuilding ordering activity remained subdued over the course of the past week, as ship owners are wary of adding further tonnage to an already pr ...
Wednesday, 01 April 15
SUPRAMAX & HANDY: RATES HELD STEADY TOWARDS THE WEEKEND
“Despite the fact that the Dry Bulk market closed off on the green last week, sentiment didn't improve by any means, not only because of ...
Wednesday, 01 April 15
WEEKLY SHIPPING MARKET UPDATE - INTERMODAL
There is no doubt that we are still witnessing a very challenging and at the same time very uncertain market, both with respect to dry chartering a ...
Wednesday, 01 April 15
Q4' 15 INDONESIA COAL SWAP CLOSED AT $45.15 W/E 27 MARCH 2015
COALspot.com: Indonesian coal swap for delivery Q2' 2015 drops month on month and week over week.
The Q2 swap declined US$ 1.54 (3.24%) mo ...
Tuesday, 31 March 15
RICHARDS BAY COAL SWAPS GAIN WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month but increased week on week.
The Q2 swap has ...
|
|
|
Showing 3096 to 3100 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Planning Commission, India
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- VISA Power Limited - India
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- The Treasury - Australian Government
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Australian Coal Association
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
|
| |
| |
|
